8 Reasons Why You Should Consider a Marriage or Civil Partnership for Better Financial Security

Thu, 29 Nov 2018 by Charlotte R.

Recent years have seen marriage rates across the UK steadily decrease over the past 40 years. Why is this, you might ask? Well, no one really knows for sure although there have been some proposed theories as to why marriage has seen a steady decline in recent years. Perhaps people are no longer the traditionalists that they once were, maybe the children of divorced or separated parents have become disillusioned by marriage or the shift into modern day society makes couples feel like there’s no pressure or need to nowadays.

Statistics show that since the early 1970s, opposite-sex marriages in the UK has fallen significantly, and marriages in 2015 were almost half the amount of what they were in 1972. However, the same can’t really be said for same-sex couples, as although the number of same-sex couples getting civil partnerships has decreased since they were introduced in late 2005, it has only done so since same-sex marriages were recognised in the UK back in 2014, suggesting that more same-sex couples are opting to get married instead of a civil partnership.

Regardless of whether you believe in the idea of marriage or a civil partnership or not, there are undoubtedly a lot of financial benefits and added financial security to be had from committing to your partner. Moreover, this is what we will be discussing in this article, here are eight reasons why you should consider marriage or civil partnership for better financial benefits and security.

1. Wedding Gifts

If you’ve both decided that you’re ready to take the next step in your relationship and move in together, then getting married can be an option for helping you to prepare your new home for married life. When you get married, it is customary for your wedding guests to buy you a wedding present as an offering and token of their affection and consent of the marriage that is going ahead.

You’ll be able to provide your wedding guests with a list of things that you require or would like as a present for your new home and life together. Your guests will then be able to pick something from the list that is within your budget or will be able to give you the gift of money to put towards something else.

This is particularly helpful when starting your lives together, as these wedding gifts will allow you to save money on having to buy expensive things such as kitchen appliances and furniture which you will require for your new home.

2. Sharing the Costs

The purchase or even just rent of a property can be a considerable expense, likely to take the majority of your monthly salary. However, whether you or your partner earn the same or more than each other, it still helps to spread the costs of your household bills and rent or mortgage with someone regardless. Most married couples will share all of the household costs, whether they contribute from their separate individual accounts, or whether they set up a joint account together to ensure that any direct debits or standing orders are paid from that account.

However much you decide you can or will contribute with your partner to the household bills will make life easier for both you and your household. By putting your money together, you’ll be able to ensure that your money covers all of your bills.

3. Marriage Allowance

In the UK Marriage Allowance can help you to save an additional £238 on tax per year, and although it doesn’t sound like that much, it’s still not to be taken lightly, and could still afford you a nice weekend break away somewhere.

In order for you get a marriage allowance, asides from being married, either you or your partner must earn less than your personal allowance which is £11,850 per annum and the other partner must ensure that they are on the basic tax rate, earning between £11,850 and £46,350. The partner who makes less will be able to transfer £1,190 to the partner who earns more than them, thus saving them up to £238 per tax year (which is from the 6th of April until the 5th of April the following year).

4. Capital Gains Tax

Capital Gains Tax or CGT is the tax that you’ll have to pay if you sell a valuable asset that has recently increased in value since you acquired it.

You will pay CGT on things such as:

A second home or property

Jewellery

Antiques

Collectables

Paintings

If they their worth ends up increasing in value by £11,000.

The law is more lenient for married couples and those who are in civil partnerships, meaning that you will be able to have a capital gains tax exemption. So that as a couple you will only have to pay CGT on assets that have increased in gains by £22,000 instead, which can be helpful especially if you’re both selling your respective properties or assets in order to buy a property for the both of you.

5. No Inheritance Tax

Inheritance Tax or IHT is the tax you will pay on a property when someone passes away, and their estate is passed onto an unmarried partner, children, grandchildren or beneficiary of the will. The threshold for inheritance tax is £325,000 meaning that you won’t have to pay an inheritance tax of 40% on the property if the property or properties left are worth less than £325,000.

40% tax on a property can be a hefty sum to hand over, especially if you still intend to live in the property after your partner has passed away, and for many unmarried or coinhabiting partners it can mean losing their family home if they can't pay the tax. However, if you are married or in a civil partnership with your partner and they pass away, whether they have a will or not, you will still be able to inherit the property without having to pay any inheritance tax, unless the property is worth more than £900,000.

In the event that your partner passes away and there is no will, and you are unmarried, or not in a civil partnership, then you will be obliged to follow the rules of intestacy. The rules of intestacy dictate that unless you were married or in a civil partnership at the time of the deceased death, then you will have no right to inherit anything unless you joint owned property or joint bank account with that person. If you did not hold a joint account or property with your partner, then their property and money will automatically go to the children of the deceased. Alternatively, if there aren’t any children or grandchildren, then the estate and savings of that person will be given to closest living relatives of that person.

6. Ensuring You Have a Home if Your Partner Passes

This coincidingly leads on from the last section, but if you don’t co-own your property with your partner then in the event of their death, you have no right to reside in that property once they have passed. Depending on the value and intent of the property after your partner’s death, you could be asked to leave the property as you have no legal right to be there, regardless of whether it’s the family home or how long you have been living there.

However, if your partner left the property to you in the will, then you will be subjected to pay inheritance tax on the property, which could see you selling your home in order to pay the 40% inheritance tax that is due on the property. If you were married or in a civil partnership, then you would have the legal right to inherit the property if there wasn’t a will and to keep your property without paying inheritance tax if there was one.

7. Ensuring You Receive Your Partner’s Pension if They Pass

Whether you partner passes away before or after retirement age, if you are married or in a civil partnership then you would be entitled to collect their pension, have your pension increased or receive what is called ‘Bereavement Support Payment’ in the event of their passing. However, this does not extend to common-law or co-inhabiting couples, and unfortunately, you would not be able to claim any pensions or bereavement support.

8. Security in The Event of Separation

Unfortunately, the law for the separation of unmarried couples with property, savings or assets isn’t as fair as it would be if you were in a civil partnership or married. Although it’s not always something that we like to consider or talk about with our partners, regardless it is a crucial thing to consider when you are wrapped up both financially and emotionally with each other.

However, if you and your partner do ever decide to part ways, then there’s undoubtedly better financial security for those who are in civil partnerships and married, than those who are not and this is purely because those who aren’t in civil partnerships or married do not have the same legal rights as those who are.

In the event of your separation, being married or in a civil partnership will ensure that you are entitled to both spousal support and around half of the costs from the sale of any property that is joint or owned by you or a partner. If you are unmarried and co-own a property, then you don’t have the right to make your partner sell the property unless you both agree to what you’re going to do with the property. In the event that you are not in a civil partnership or marriage and you can’t decide what you should do with your property, then you may have to go to court in order for them to determine on what will happen to the property.

So if you are not the joint owner of the property, but did contribute to the household and its upkeep, then you may be able to claim some money if you can prove in court that you did substantially contribute or invest in the property.

Conclusion

Although undoubtedly marriage rates falling in the UK marks a change to the conventions of commitment and partnership in modern society, the laws in the United Kingdom don’t reflect the shift in traditions and instead still prove to give married or partners who are in a civil partnership an advantage over co-inhabiting and common-law couples. Many couples may not believe in marriage due to religious or personal reasons, however, there is undeniably a vast financial benefit and added security of getting married or entering a civil partnership with your loved one, so it is definitely worth considering to ensure that you are both financially secure and better off in the event of anything unexpected.

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